Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
Damn the Deficits, Huge Trump Tax Cuts Ahead! - 29th Apr 17
Gold Hostage to Stocks - 29th Apr 17
Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It - 29th Apr 17
Stock Market Sentiment, Re-Fueled Along the Way - 28th Apr 17
Calling out the Central Bankers - 28th Apr 17
Fed's Third Inetrest Rate Hike and Gold - 28th Apr 17
USD/CAD - Invalidation of Breakout or Further Rally? - 28th Apr 17
What Happened to the Stock Market Crash Experts Were Predicting - 28th Apr 17
Earth Overshoot Day - Human Population Growth - 28th Apr 17
Misunderstanding GDXJ: Why It’s Actually Great News For Junior Miners - 28th Apr 17
What Makes Bitcoin Casinos So Remarkable? - 28th Apr 17
Financial Markets Improvised Explosives - 27th Apr 17
More Stock Market Short-Term Uncertainty As Stocks Get Close To Record High - 27th Apr 17
Elliott Wave Theory: Is Elliott’s Theory Enough? - 27th Apr 17
Billionaire Investor Paul Tudor Jones Says Stock Market Valuation Is “Terrifying” And He Is Right - 26th Apr 17
The Great BrExit Divides - Britain, USA and France - 26th Apr 17
10 Facts That Show Our Taxes Are Worse Than You Thought - 26th Apr 17
What Trump’s Next 100 Days Will Look Like - 26th Apr 17
G20: SURPASSING THE 2nd GLOBAL STEEL CRISIS - 26th Apr 17
What A War With North Korea Would Look Like - 25th Apr 17
Pensions Are On The Way Out But Retirement Funds Are Not Working Either - 25th Apr 17
Frank Holmes : Gold Could Hit $1,500 in 2017 Amid Imbalances & Weak Supply - 25th Apr 17
3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold - 25th Apr 17
SPX may be Aiming at the Cycle Top Resistance - 25th Apr 17
Walmart Stock Extending Higher - Elliott Wave Trend Forecast - 25th Apr 17
Google Panics and KILLS YouTube to Appease Mainstream Media and Corporate Advertisers - 25th Apr 17
Gold Price Is 1% Shy of Ripping Higher - 25th Apr 17
Exchange-Traded Funds Make Decisions Easy - 25th Apr 17
Trump Is Among The Institutionally Weakest National Leaders In The World - 25th Apr 17
3 Maps That Explain the Geopolitics of Nuclear Weapons - 25th Apr 17
Risk on Stock Market French Election Euphoria - 24th Apr 17
Fear Campaign Against Americans Continues Nuclear Attack Drills in New York City - 24th Apr 17
Is the Stock Market Bounce Over? - 24th Apr 17
This Could Be One Of the Biggest Winners Of The Electric Car Boom - 24th Apr 17
Le Pen Shifts Political Landscape- The Rise of New French Gaullism  - 24th Apr 17
IMF Says Austerity Is Over - Surplus or Stimulus - 24th Apr 17
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17

Market Oracle FREE Newsletter

Why 95% of Traders Fail

China’s Rare Earths Game Attracts Players Worldwide

Commodities / Metals & Mining Nov 02, 2011 - 04:58 AM GMT

By: Anthony_David

Commodities

Early 2011 saw stock prices of rare earth companies soaring upwards with the share price of Colorado based Molycorp Inc. reaching $79.16 per share. However, Molycorp share prices fell by 32% over four days in September. The price fall was partly because of falling rare earth prices worldwide combined with excess inventory and partly because of overall market trends. Stock prices of Australia’s Lynas Corp have also been adversely hit by falling rare earth prices. Average rare earth oxide prices have fallen almost 20% over the last quarter. Recent developments could however bring about another hike in rare earth prices, which would mean sunny fortunes once again for non-China based rare earth producers.


The world’s largest rare earth producer, China’s Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech, has halted production for a month in an effort to push prices upwards. A company official said, “Production should resume in a month as it is just a provisional measure.” According to the company, the current move to stop supplies of raw materials to its processing units was to “stabilize the market and balance supply and demand.” A similar month-long production halt had been called in May 2008 as well. Investors have not reacted positively to the announcement and Baotou’s stock price fell by almost 4%.

In September this year, Baotou purchased praseodymium-neodymium oxide at above market rates in spite of being a producer of the oxide. The company stated that the move was to “protect resources and maintain market stability.”

Baotou’s announcement has been taken with a pinch of salt by the global rare earth community. The Financial Times wrote, “Baotou’s move suggests that Chinese efforts to control rare earths prices could be greater than previously thought.” Rare earth analyst Sam Berridge of RBS said, “We would expect a month-long shutdown from the largest producer in the world to impact prices reasonably quickly. Rare earth production is quite consolidated and the market is quite small, so one of the majors could influence the supply-demand balance quite easily.”

China’s actions could help rare earth prices climb although new supplies from Australia, Canada and the US could once again flood the market bringing prices down. In the meanwhile, companies such as Molycorp will benefit from Baotou’s announcement. In fact, analyst Paretosh Misra of Morgan Stanley has predicted that Molycorp’s stock price could reach $90 in the near future. Molycorp’s mines will reach full production next year while Canada’s Avalon Rare Metals and Quest Rare Minerals are yet to report profits. Both companies are much smaller and more volatile than Molycorp but both have rare earth deposits that would soon be rated as the world’s largest.

Rare earth deposits have been discovered at other global regions too. Mongolia has a huge deposit of rare earth metals and most of it is untapped. A 2009 survey by the US Geological Survey (USGS) estimated that Mongolia had about 31 million tonnes of rare earth metals, which places the country just after China in terms of deposit size.

Kazakhstan is another nation that intends to make an entry in the rare earth sector in 2012. The state nuclear company Kazatoprom has signed separate exploration agreements with the French Bureau for Geological and Mining Research, and Japan’s Toshiba Corp and Sumitomo Corp.

The USGS has also reported rare earth deposits in southern Afghanistan. The estimates have been pegged at 1 million metric tonnes although Afghanistan’s infrastructure and political climate are not conducive to rare earth development right now. Robert Tucker, lead author of the USGS report, said, “I fully expect that our estimates are conservative. With more time, and with more people doing proper exploration, it could become a major, major discovery.”

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2011 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife